GBTZF - Citi expects more than 50% upside from here:
Global Logistic Properties (GLPL.SI)
Buy: Growing in both China and Japan
Buy 1
Price (10 Nov 11) S$1.71
Target price S$2.67
from S$2.62
Expected share price return 56.1%
Expected dividend yield 1.0%
Expected total return 57.1%
Market Cap S$7,859M
US$6,099M
? Investing for growth in both China and Japan, reiterating Buy — Global Logistic
Properties’ (GLP) demonstrated the Company’s ability to deliver continuous growth with
a relatively low-risk profile, which is driven by its unique and policy-friendly business
model as well as its dual China-Japan exposure. The company is investing new
projects in both China and Japan which should generate decent long-term NAV growth.
Our TP S$2.67/sh is set at par to our est. NAV and 1.33x PB ratio. GLP is now trading
at 36% NAV disc and 0.85x PB, and we believe the stock will be boosted by new
acquisitions and continuous growth in earnings.
? 1HFY12 results in line with our expectations — GLP reported 1HFY12 results with
an increase in underlying profit (excluding revaluation) of 21% YoY to US$176.5m,
which accounts for c.55% of our previous full-year estimate of US$321m. Its core profit
is c10% better than our estimates on higher foreign exchange gain on its JPY deposits
and demand notes, driven by a strengthening of the yen over the US dollar during the
period. Revenue increased by 17.6% YoY to US$268m in 1HFY12.
? Aggressive expansion in China and Japan — The company has been aggressive in
looking for growth opportunities recently. GLP made two acquisitions in August 2011 –
it purchased a 49% stake in the Shanghai Yupei Group for US$53.6m (Yupei is an
industrial property developer in Shanghai holding four completed logistics parks with an
NLA of 252,943 sqm). GLP bought 90% of Vailog Jiading Distribution Center and Vailog
Songjiang Logistics Park for US$60.2m, with total NLA of 150,288 sqm. In September,
it formed a JV with the Canada Pension Plan Investment Board to develop and hold
modern logistics facilities in Japan: each of them will invest US$250m over a three-year
horizon, and the first project is to commence work on the 93,831 sqm GLP Misato III
development. Construction work of GLP Misato III will start in April 2012 and
completion is for May 2013, while total cost for the development is US$155m. All these
new acquisitions/developments should enhance NAV in the longer run. |
